Feb 9, 2023 - Economy

Startups race for communications support

 Illustration of racing flags made of hundred dollar bills.

Illustration: Shoshana Gordon/Axios

Engineering talent has flooded the market due to big tech layoffs, and startup founders plan to snatch it up.

Why it matters: These new companies will need smart communicators to help them build their brand, explain their purpose, recruit top talent and bring in business.

  • "Almost every one of the founders that we've backed says that their No. 1 goal at the seed stage is to attract world-class engineers," Vijay Chattha, VSC chief executive and founding partner of VSC Ventures, told Axios.
  • "And if you're building a startup outside of Silicon Valley — which many are — then top-class engineering is actually directly correlated to publicity and awareness."

Zoom in: Downturns are the best time to start companies — see PayPal or Airbnb — but a strong communications plan and narrative must be in place to keep momentum with investors and talent.

  • An example can be seen in the climate space, says Chattha. "These startups are still raising a lot, because they are telling the story of how the planet does not [care] about the market," he says. "We have to solve these climate problems, and so you're seeing a lot of those companies growing and doing well."
Data: U.S. Census Bureau Business Formation Statistics via Economic Innovation Group; Chart: Axios Visuals

Yes, but: Not all founders understand the value of communications, and not all communicators or PR agencies want early-stage work.

What they're saying: PR can be viewed as discretionary spending, so to be successful you have to be scrappy and nimble.

  • “Early-stage startup PR, when done well, is the largest untapped opportunity in our industry," says Emilie Gerber, founder and CEO of Six Eastern. "Founders think it isn’t worth the budget, while agencies think it’s not going to be profitable. Both sides are being proved wrong by new models and approaches.”

Larger agencies typically don't enter the picture until a company has matured.

  • There are exceptions, says Margot Edelman, deputy general manager of Edelman New York. "We want to work with companies at the cutting edge of technology — even if they have smaller budgets — because that's where the innovation is happening and what reporters are interested in covering, but it has to be a good fit.
  • "Once you get beyond Series B, there's a need for an agency with global reach. And companies with reputational issues may be ready to work with an agency earlier, but it's important that the client is structured correctly before we sign on."

The bottom line: As the startup momentum continues, so does the need for narrative development, effective storytelling, visibility and crisis management.

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